Are you a business person in need of a business investment opportunity? Then having a look at this article would greatly assist you in having an inside eye to how real estate investment has evolved to be in a position for a recommendation as equity for investors to look into. Over the recent years, it is clear that investing in commercial real estate has proven to attain the position of cash and bond investment. Commercial real estate is not for an average investor, but the competitive returns and tax benefits it offers are nothing but a pie to take.
How would a small investor take a grip on this opportunity? DST is a promising option that you may want a piece of as it offers a desired amount of investment. Although real estate investment may seem to be a financial stone to reach as it might require intensive management, DST offers passive income over quality commercial assets with a low investment cost and no managerial requirements. What would be the reason for you being left out?
How does DST Operate?
A DST (Delaware Statutory Trust) is a commercial real estate asset structure that pools together investor’s money to have a passive ownership interest of assets belonging to a trust. The trust is found and established by experts in the real estate industry known as sponsors who pinpoint and obtain the assets. The sponsors are the ones responsible for its running while investors acquire a beneficial interest in it. This means that the investor owns a percentage of ownership with no claims over the specific asset of the real estate.
What are the benefits of investing with Delaware Statutory Trust?
DST comes with quality advantages that people indeed of business investment need to act on. Some of these benefits include ownership of commercial assets, exclusive tax deferment, and most of all, the eligibility of 1031 exchange.
DST allows investors to make use of the 1031 property exchange that is a take for business investors. 1031 exchange gives you the opportunity to a passive stream of income and the diversification of risk through the ownership of multiple commercial assets, which can be out of reach for most investors.
How the 1031 exchange works for DST property exchange
The 1031 exchange is a section under the 1031 US code of the IRA that allows real estate owners to differ from capital tax gains on an exchange of an investment asset. Under IRS principles, DST is considered eligible for the 1031 exchange tax deferment as they are under direct property ownership for tax possessions.
For an investor to qualify to differ from taxes, then the proceeds of the sale must be refinanced for a property of the same kind within a duration of a maximum of 180 days to the closing date of the sale. Tax deferment gives an investor the privilege to retain the value of an investment asset and be transferred to the other property that replaces the sold asset.
The time limit for a DST property sale ranges from 3 – 5 days after the sale of a property. Given the strict deadline rules under the 1031 exchange, all 1031 exchange rules apply the same way for all property, including all DST properties for sale.
How investors can invest in DST properties
Commercial properties that qualify under DST properties include but are not limited to office space, industrial parks, storage facilities, galleries, medical space, etc. Due to the significant investment created by DST, the potential income is enormous. Their purchase price is nowhere possible for a single investor, but through DST, it is possible.
DST owns multiple properties but focuses on a single property type. This allows investors to have access to multiple ownership of properties and, in addition, diversifies the risk coming with it.
The Advantages of investing with DST
Some of the advantages offered with DST property investment include;
– The deferment of capital gains.
– The ability to a consistent cash stream
– No direct property management
– Diversification of risks
As an investor, these are the reasons you should look for when opting to diversify your investment options.